Exhibit 99.1
PRESS RELEASE
L. B. Foster Company
415 Holiday Drive, Pittsburgh, PA 15220
Contact: Stan L. Hasselbusch
Phone: (412) 928-3417
FAX: (412) 928-7891
Email: investors@LBFosterCo.com
FOR IMMEDIATE RELEASE
L. B. FOSTER COMPANY
REPORTS STRONG FOURTH QUARTER RESULTS
AND A 267% INCREASE IN FULL YEAR NET INCOME
PITTSBURGH, PA, January 26, 2006 - L.B. Foster Company (NASDAQ: FSTR), a leading
manufacturer, fabricator, and distributor of rail, construction, and tubular
products, today reported its fourth quarter earnings per diluted share increased
considerably compared to the year-ago quarter, the fourth consecutive quarter
the Company has recorded an earnings increase over the prior year.
2005 Fourth Quarter Results
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In the fourth quarter of 2005, L. B. Foster had earnings per diluted share of 8
cents and net income of $0.9 million. In the fourth quarter of 2004, the Company
had a 10 cent loss per diluted share and a net loss of $1.0 million.
Net sales increased 19% compared to the prior year quarter to $82.8 million
compared to $69.7 million in 2004.
Gross margin was 11.6%, up 300 basis points from the prior year quarter as a
result of increased margins at standard before manufacturing and other
variances, as well as a significant reduction in LIFO expense, partially offset
by unfavorable plant variances.
"Piling, Coated Pipe, and Rail Products continued to deliver strong sales and
gross profit, although, as expected, profitability continued to be hampered by
relatively weak results in our CXT concrete tie unit," remarked Stan
Hasselbusch, President and Chief Executive Officer. "Our concrete tie operations
were much improved over the third quarter of 2005, but remained unfavorable to
prior year quarter comparisons. We are, however, pleased to report that tie
production in our recently refurbished Grand Island facility continues to
increase pursuant to our expectations. We are also pleased to announce that our
Tucson facility construction process has commenced as we have recently received
final permitting approval from local authorities," added Hasselbusch.
Mr. Hasselbusch concluded, "Overall business activity remains strong and is
reflected in our fourth quarter order bookings. Bookings for the fourth quarter
were $86.8 million, 14% higher than the same period last year. Backlog at
December 31, 2005 was $129 million, which was 29% higher than last year."
Selling and administrative expenses increased $0.6 million or 8% over the same
prior year period due to employee compensation and benefit expenses. Fourth
quarter interest expense increased $0.3 million over the prior year due to
increased interest rates and increased borrowings. The increase in borrowings
was due primarily to working capital requirements, especially inventory, as well
as higher than typical capital investments made in 2005. The income tax rate was
10.6% in the fourth quarter compared to 37.4% in the prior year quarter. The low
tax rate in 2005 is the result of adjustments related to the reconciliation of
certain tax accounts and releasing a portion of the valuation allowance provided
for state deferred assets.
2005 Annual Results
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For the twelve months ended December 31, 2005, the Company reported
substantially improved earning per diluted share of 52 cents and net income of
$5.4 million versus earnings per diluted share of 14 cents and net income of
$1.5 million in 2004.
Net sales for the twelve months ended December 31, 2005 increased 19% to $353.5
million compared to $297.9 million in 2004, which we were able to leverage into
a 222% increase in pretax income.
Gross margin improved 100 basis points to 11.3% due to decreased LIFO expense
and increased gross margins at standard, partially offset by unfavorable plant
variances.
Selling and administrative expenses rose $3.2 million or 11% for the same
reasons previously mentioned. Interest expense rose 37% as a result of increased
borrowings and increased interest rates. The income tax rate was 29.8% in 2005
compared to 38.4% in the prior year, primarily as a result of changes in the
state tax valuation allowance.
Cash flow from operations was a strong $10.2 million for the fourth quarter;
however the full year cash from operations was a negative $3.9 million as the
Company's working capital increased significantly. Capital expenditures for the
year exceeded $15.0 million due primarily to the construction of a new concrete
tie manufacturing facility and the upgrade of another, to meet the requirements
of a long-term contract with the Union Pacific Railroad. These cash requirements
were funded from our revolving credit facility and interim fixed rate lease
financing as well as the proceeds from the sale of an unused facility in
Doraville, Georgia.
L. B. Foster Company will conduct a conference call and webcast to discuss its
fourth quarter operating results on Thursday, January 26, 2006 at 11:00am ET.
The call will be hosted by Mr. Stan Hasselbusch, President and Chief Executive
Officer and Mr. David Russo, Senior Vice President and Chief Financial Officer.
Listen via audio on the L.B. Foster web site: www.lbfoster.com, by accessing the
Investor Relations page.
The Company wishes to caution readers that various factors could cause the
actual results of the Company to differ materially from those indicated by
forward-looking statements in news releases, and other communications, including
oral statements, such as references to future profitability, made from time to
time by representatives of the Company. Specific risks and uncertainties that
could affect the Company's profitability include, but are not limited to,
general economic conditions, adequate funding for infrastructure projects, the
potential value of the Dakota Minnesota & Eastern Railroad, delays or problems
encountered during construction or implementation at our concrete tie
facilities, and the continued availability of existing and new piling products.
Matters discussed in such communications are forward-looking statements that
involve risks and uncertainties. Sentences containing words such as
"anticipates", "expects", or "will", generally should be considered
forward-looking statements. More detailed information on these and additional
factors which could affect the Company's operating and financial results are
described in the Company's Forms 10-K, 10-Q and other reports, filed or to be
filed with the Securities and Exchange Commission. The Company urges all
interested parties to read these reports to gain a better understanding of the
many business and other risks that the Company faces. The forward-looking
statements contained in this press release are made only as of the date hereof,
and the Company undertakes no obligation to update or revise these
forward-looking statements, whether as a result of new information, future
events or otherwise.
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
L. B. FOSTER COMPANY AND SUBSIDIARIES
(In Thousands, Except Per Share Amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
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2005 2004 2005 2004
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NET SALES $82,829 $69,729 $353,484 $297,866
COSTS AND EXPENSES:
Cost of goods sold 73,218 63,757 313,491 267,255
Selling and administrative
expenses 8,033 7,429 31,069 27,877
Interest expense 697 417 2,472 1,801
Other income (81) (205) (1,286) (1,471)
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81,867 71,398 345,746 295,462
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INCOME (LOSS) BEFORE INCOME TAXES 962 (1,669) 7,738 2,404
INCOME TAXES 102 (625) 2,304 924
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NET INCOME (LOSS) $860 ($1,044) $5,434 $1,480
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BASIC EARNINGS (LOSS) PER COMMON SHARE $0.08 ($0.10) $0.54 $0.15
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DILUTED EARNINGS (LOSS) PER COMMON SHARE $0.08 ($0.10) $0.52 $0.14
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 10,186 10,038 10,122 9,952
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AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - DILUTED 10,585 10,355 10,492 10,268
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